Aug 25, 2009

Perfect Storm – Part 1

Posted by: aviceroy In: thought leadership

Porter Novelli CEO Gary Stockman Joins President, Global Business Operations and CFO Anthony Viceroy to Reflect on the Pitfalls and Possibilities of Turbulent Times

From the global financial crisis to the meteoric rise of social media, the past eight months have been a season of unprecedented change. As there are some signs that the crisis may be easing, it seems a good time to assess what happened. Over the course of a comprehensive and wide-ranging conversation, Porter Novelli’s CEO Gary Stockman and President, Global Business Operations and CFO Anthony Viceroy offer insights and analysis on how the agency managed to not only weather the turbulent times, but also find the inherent possibilities in the crisis and emerge stronger than ever.

In part one of this four-part series, Stockman and Viceroy reflect on their initial reactions to the early days of the global economic crisis, discuss its similarities and differences to past crises and offer perspective on Porter Novelli’s response.

Both internally and externally, managing staff and managing accounts, how have you adapted to the turbulent economic outlook, and what advice would you give others on successfully navigating these times?

Gary Stockman: The advice I have given people has been threefold. One is to keep your head out of your shell. During tough times people tend to withdraw, and that’s a mistake. The second thing is to focus relentlessly on clients’ immediate needs. There will be time to take the longer view; but in the midst of a significant downturn you have to focus closer in. And third is to look for opportunities to position your organization for the recovery. That’s what we are doing at Porter Novelli, and we are advising clients to think that way, too. We don’t know when the recovery will come, but we do know that it will come. And there are things that can be done, right now, to get ready for it.

Anthony Viceroy: This year has been a year like no other. It has been challenging but also has created great opportunities. What has helped us is taking a different approach to these tough times – adopting a play-to-win mentality as opposed to a play-not-to-lose mentality. We really have stepped up our talent acquisition. We have been extremely aggressive in going after top-tier clients. We have looked to improve upon all of our departments, particularly our digital media and social media functions. And we’re really trying to use this as an opportunity, so that when the recession does end, we will have come out stronger. In that way we will be more valuable to our clients.

Gary Stockman: Getting the right talent in place is really critical. And there is a lot more good talent available in a down economy than when there is an outright war for talent taking place.

At what point did you realize that the economic downturn would be so dramatic? Was there a specific moment internally, externally or with a client that crystallized the realization for you?

GS: For me there were several notable moments, including the day in September 2008 when Lehman was allowed to fail. That one took your breath away. The other was when the Madoff scandal broke: not because of the number of people affected or even the amount of money involved, but because it represented such a complete violation of trust. At the time I remember commenting to someone that the Madoff scandal would extend the recession by three months because it added this aura of incredible uncertainty and fear. And unfortunately I think I was right.

The litany of events leading into this recession has meant that restoring trust and rehabilitating reputation is one of the most important things that we as communicators can help our clients do.

AV: For me personally, I think the collapse of Bear Stearns in March of ’08 was a clear signal that something was wrong. While most companies made it through the summer relatively unscathed, the third and fourth quarters saw tremendous panic. Nobody really understood what the impact truly was since everything was happening quickly. You saw a tremendous amount of downsizing or rightsizing in every business. But then people came back after the New Year and realized, “We’re still in business. We still have great clients to service.” And rather than focus on the negativity, our people began asking: “How can we be innovative and creative and develop strategies that really help clients weather this economic downturn?”

How is the current economic outlook reminiscent of earlier periods or challenging business cycles? What did you do then that is applicable, and in what ways are we in uncharted territory?

GS: There are certainly elements that are common to economic corrections, whether it was the dot-com implosion or even back to 1990 and ’91. And there are similarities in terms of what you do to respond to a downturn, such as scaling the business to size appropriately for the work you have, and looking at changes you want to make in the business. But one of the big differences this time is that while we have an unprecedented economic downturn, we’re also seeing a profound shift in the communication landscape. Either of those things would be a sea change unto itself, but when you have both happening, you have a kind of perfect storm.

And while these are all happening concurrently, they definitely have implications for one another. I’ll give you an example. The focus for clients right now is delivering measurable results as efficiently as possible. Social media is able to target and reach people in measurable ways very efficiently by allowing brands to have the right conversations with the right people at the right time – and through the right vehicles. Social media is accelerating beyond what you might normally expect, because its acceptance is being catalyzed by the economic downturn. The economic pressures clients are facing are prompting them to look for ways to get measurable results right now and very efficiently.

AV: You can go back to the mid-’70s to get a sense of this. Even the crash of ’87 didn’t sustain on a global level as long as the one we’re in now. The recession in ’90, ’91 also stands out in my mind as a benchmark. Those were scary times filled with a lot of uncertainty. I remember in ’91 seeing people holding signs that said: “Have MBA, Will Work for Food.” I agree with Gary when he points to the bursting of the tech bubble, and even that, you could argue, was isolated to that sector. Unless you were in that industry you weren’t affected as much as you are today. What we are seeing now is the broad global impact on every business. What has been very challenging for people is to know when the rebound will occur. So the ability to manage has taken on a more short-term process, yet you have to focus on long-term needs, too. You are managing day-to-day for your own business and trying to figure out how to remain cost competitive while creating and adding value that clients want and need.

Check back with next week for part two of this four-part series, in which Gary Stockman and Anthony Viceroy reflect on the rise and power of social media and how it is changing the content and context of external communications, empowering a creative meritocracy and changing the traditional internal learning model.

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